Irjnst V2i4p103
Irjnst V2i4p103
Irjnst V2i4p103
1.1. INTRODUCTION
Over the last three decades, there is higher growth in the power, generation and speed of computing, as well as
speedy developments in the sphere of data exchange methods and information systems‟ practicability and
capabilities. It can be considered that Information and technologies and information systems have become a well
known, unavoidable, or vital part of business firms, political, competitive, cultural, social, and personal life almost
in every part of the world. Business firms with focus on information systems is try to gathering needed information
for decision making at different levels of management. Because of all-encompassing changes in business
background and emerge of computers and internet, the business structure and needed information had change, the
competitiveness as a major factor for life of organizations in information edge is preyed of information technology
challenges(Hemmatfer, Salehi & bayat, 2010). As pinpointed Martina Casolova by there is high developments,
broad utilization of information communication technologies and the vision of the information age suggest that the
trend of “going technological” will continue in the near future and furthermore, mostly positive impact on business
firms, economy, community and society. At the same time, though, it is necessary to emphasize that, in order to
fully benefit from using Information System, their acquisition and utilization must be understood and properly
managed (Martina Casolova).
Its well known that information is considered as essential resource in decision-making processes and enhancing
firms performance in different aspects. Information system is imperative, however, growing in complex economic
scenarios such as the currently one. The experience of organizations' managers needs to be supplemented with the
needed information to reduce risks and make the most appropriate decisions. Thus, organizations turn to information
systems for the provision of this basic resource. It can be considered as organizational asset. Information system is a
way through which data/information flows inside/outside a company, from an employee or department to other
employees or departments/organizations. This may occur anywhere, from the firms internal communication to
computerized systems that can generate periodical reports for varied users users of information system. Information
systems in organizations were understood in the 1970s as an tool to cover solely operational functions which were
not support decision making and improvement in organizational improvements. However, new changes and
technological advancements have focused them on tactical and strategic functions without neglecting their first
functional application (García, 1994). As pointed out by Romeiro and Garmendia (2007), information systems have
focused on lower levels such as accounting, financial, sales, marketing, recording and logistics information (Pana,
2014).
Information systems and technologies are a important component of successful firms. It has benefit of improving the
efficiency and effectiveness of business processes, managerial decision making, and business collaboration which
can increase their competitive positions in a rapidly changing marketplace(Hemmatfer, Salehi & bayat, 2010). The
worth of information is directly connected to how it helps decision makers in achieving the business goals.It helps to
differentiate data from information and depict the characteristics used to evaluate the importance of data.
Understanding the potential impact of information systems and having the ability to put this knowledge to work can
result in a successful personal career which can contributes organizations that reach their goals (Pana, 2014).
To understand underlying concept of information system application it‟s needed to conceptualize information
system. Information system can be understood technically as a set of interrelated components that collect, process,
store, and distribute information to support decision making, coordination, and control in an organization (Laudon &
Laudon, 2013). Moreover, it may also help business leaders and employees to analyze problems, visualize complex
subjects, and create new products. It can consists of information about significant people, organization, places, and
things within the organization/in the environment surrounding it (O‟Brien, 2008).ISs performs four main activities
that organizations need to make decisions, control operations, analyze problems, and create new products or
services. These are input, processing, output and feedback. Input captures raw data from within the organization or
from external environment/users. Processing converts this raw data into a meaningful information. Output transfers
the process in sequence to the people who will use it or to the behavior for which it will be used. It requires
feedback, which is output that is returned to appropriate members of the organization to help them evaluate or
correct the input stage (Laudon & Laudon, 2013).
According to O‟Brien & Marakas (2007),information system can be any intentionally set grouping of people,
hardware, software, communications networks, data resources, and policies and procedures that can store, retrieve,
transform, and disseminate information in business and or. People depends on modern information systems to
communicate with one another using a variety of physical devices, information processing instructions and
procedures, communications channels, and data resources. An information system can be defined strictly as a set of
unified mechanism that collect, process, store, and deal out in order to support choice making, harmonization and
control in an association (O‟Brien, 2006). As posited by Patterson (2005), an IS is a group of interrelated
components that work to carry out input, processing, storage, output and control actions in order to convert raw data
into information that can be used to support forecasting, planning, control, coordination, decision making and
operational activities in an organization. According to Shim (2000) an information system is a computerized system
that processes data and produces information that enhances performances of firms. This process is considered as an
information processing cycle (IPC). The IPC consists of input, process, output, storage, and control that required
carrying out information system activities. Every business firms in this competitive and technological age needs an
information system to keep track of all business activities and performances, to make right business planning, till the
product delivery via manufacturing and quality cycles (Laudon & Laudon, 2013).In addition to supporting decision
making, harmonization, and control, in sequence scheme may also help manager and workers study problems,
visualize complex subjects, and create new products (O‟Brien, 2006).
Scholars such as Talvinen, (1995); Toivonen, (1999), focused substantial investigation on management information
system and in order skill from commerce imperative. It is increasingly being used by firms in an attempt to a gain a
sustainable competitive advantage. Use of information technology to support the marketing function has been no
different. Furthermore, Toivonen (1999) proposed that, marketing information systems are physically embodied in
information technology, which requires utilization of physical devices and instruction and procedures used to build
the system. Information technology may provide opportunities for competitive advantages or be a competitive
necessity in currently turbulent business environment. One of the very first benefits that a company gets from the
use of an information technology based marketing information system (MktIS) is improvements in the reporting
system (Gounaris, Panigyrakis & Chatzipanagiotou, 2007). The another important benefit of information technology
based MktIS is the ability to monitor a company's market environment more effectively, specifically with regard to
customer relations, and to assist managers and salespeople in meeting their marketing and sales objectives (Speier &
Venkatesh, 2002). The implementation of an ITbased MktIS can potentially change the role of the marketing
function radically and helps to increase the company's degree of customer orientation(Nakata & Zhu, 2006).
Furthermore, the emergence of Web based technologies has generated important business opportunities for
organizations, suppliers, channel members and customers. In online social networks/medias, people receive and
provide a great deal of information. In this way, social media offers an excellent opportunity for MktIS to promote,
sell and distribute firms products.
As we conceptualized from management information system, it supports managers in decision making at middle
level management. However, the concept of business information system is very broad. Business information system
(BIS), as a group of interrelated components that work cooperatively to carry out information system activities to
transform data into information products that can be used support forecasting, planning, control, and coordination of
managerial decision making and to support operational activities which is particularly vital for business decision
making. It has resources of people (managers and technical support staffs), hardware (computer and other physical
items), software (operating procedures and application software), communication technologies (networked
computer) and database resources (Elizabeth, 2008). In most organization BIS make extensive use of information
technology such as personal computers for purpose of business decision making. The reasons why computerized
business information systems have become widespread are evident in their advantages such as speed, relevance
accuracy and dependability. Moreover, BISs have high degree of flexibility due to their ability to be programmed to
carryout wide variety of tasks(Elizabeth, 2008).Based on purpose that why organizations uses information system in
organization we have two classifications of information system. (1) To support business operations - To assist daily
business operation and system. (2)To support managerial decision making - supporting decision making at different
levels of management (O‟Brien & Marakas, 2007).
According to O‟Brien the applications of information systems that are implemented in today‟s business world can be
classified in different ways. For instance, types of information systems can be classifiedas either operation that
supports daily operation of business: Support of business operation or managerial decision making. Information
system has benefit in supporting of business operation such as transaction processing systems (TPS), process control
systems (PCS) and Enterprise collaboration systems (ECS). It is significant in supporting managerial decision
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International Research Journal of Nature Science and Technology (IRJNST) E-ISSN: 2581-9038
making such as management information system (MIS), decision support system (DSS) and executive information
systems (EIS). As depictedby Patterson (2005),there are various categories of information system such as data
processing systems, management information systems, decision support Systems and executive information system
(O‟Brien & Marakas, 2007).
Safari, & Zavareh, 2011).As posited by Heidarkhani, et al (2013), DSSs are type of managerial in sequence scheme
that help managers in choice making that needs model, formulation, scheming, compare, select the best that can
predict the scenario. According to Khanore, et al. (2011), DSSs are particularly designed to help management make
decisions in situations where there is uncertainty or risks about the possible outcomes of those decisions. According
to Shim (2000), it is a computer-based information system that assists managers in creation many multifaceted
decisions, such as decisions wanted to solve badly defined or semi-structured problems.
focuses on identifying the customers for the firm's products or services, determining wants, planning and
developing products to meet needs of customers and promoting these products and services to customers. Sales
functions are concerned with contacting customers, selling the products or services, taking orders and following up
on sales. Sales and MktIS supports these activities (Laudon & Laudon, 2006). According to Shim (2000), MktIS
supports marketing activity in the areas of product decision, marketing programs development and sales forecasting.
consequently leads to effectiveness and greater efficiency. According to O‟Brien (2006), inter networked electronic
business enterprises “view cross-functional enterprise systems as a strategic way to use IT to share and disseminate
information resources and improve the efficiency and effectiveness of business processes (Khanore, et al., 2011).
Among the most popular and most commonly used cross functional system certainly enterprise resource planning
systems, supply chain management systems, customer relationship management systems, and knowledge
management systems (Patterson, 2005).
The Internal SCM supports internal supply chain processes and activities to transform the acquired raw materials
and services into final products as well as to manage inventory and materials with firm. The Upstream SCM is used
to facilitate inbound logistics as it integrates a business with its suppliers and is used to manage and co-ordinate the
supply ordering processes and overall relationships with company strategic suppliers which gives company
competitive advantage. The Downstream SCM is used to enhance the outbound logistics to supports activities and
processes connected with selling, distributing and delivering products to customers or even consumers (Laudon &
Laudon, 2013).
Above and beyond the division of SCM based on the supply chain part, it is also possible to categorize these systems
by their information-processing support functionalities. From this point of view, there are two main types of supply
chain planning and supply chain execution systems (Laudon & Laudon, 2013). The former helps companies
determine production quantities to meet the customers‟ demand and that is why the supply chain planning software
helps businesses suggest sourcing and manufacturing plans, distribution and logistics action statements or product
demand forecasts (Nowduri & Al-Dossary, 2012). In addition, the execution SCM is used to integrate the outbound
logistics which focuses on actual movement of products from the company to warehouses, distribution centers,
retailers, or customers. The last possible classification of SCM is based on type of product demand forecasting.
The original type of SCM, categorized based on the production decision-making, is known as a build-to stock or
push-based system. As we understood from its name, this software is based on a decision-making, uses
mathematical functions and modeling algorithm that creates production schedules based on forecasts of demands for
products, and once the goods are produced, they are pushed further in the chain, either to warehouses, distribution
centers, or retailers (Laudon & Laudon, 2012).
The more recent SCM, which is network based or Web-driven and inter networked electronic business enterprises,
made-to-order or pull-based model. The build-to-order systems the manufacturer only begins assembly after an
order has been placed. Usage of this system leads to lower inventory carrying costs, reduced product cycle time, and
to its utilization a company may be able to effectively implement the just-in-time (JIT) strategy to have better
inventory flow in organization, because of accurate delivery of goods in the right amount and as it are needed (Shim,
2000).
Currently, there are a number of emerging technologies which supports business activities in different activities. In
the Information Age, the functionality of the SCM systems is enabled mainly by web technologies, including the
Internet, intranets and extranet, which consequently enhance performance and increase efficiency of these systems.
The outgrowth of internet-based technologies and networks, all involved parties can easily and quickly communicate
with each other, instantly share updated information with regard to supply, inbound deal with acquisition of raw
materials and outbound logistics deals with selling and distribution of goods, or actual demand, and thus make better
decisions regarding any process or activity of the production cycle. Besides this, thanks to the standardized web-
based environment, the SCM may be effectively used also on a global scale to coordinate global chains that include
participating members from many countries. Lastly, to encapsulate the business benefit of SCM, among the top
benefits of using these systems doubtless belongs to well-run supply chain, accurate information instantly available
to all involved parties, significant time saving, reduced supply chain costs, and even increased sales through the
correct and exact availability of products where they‟re needed (Laudon & Laudon, 2012) & O‟Brien & Marakas,
2007).
The sales force automation feature may Supports Company to increase the efficiency of productivity by focusing on
sales and service on the most profitable customers.
Customers service applications helps firms to provide updated information about customers to contact points and
thus to make the customer support and service more efficient and marketing modules include tools for analysis of
data about marketing and customers and consequently identify the opportunities for product/service modification,
improvement or adjustment, as well as for cross-selling, up-selling and bundling in which combination of products
is sold as a bundle at a price lower than the total cost of the individual products (Patterson, 2005). Because of the
fact that customers have an enormous value in the information age and are considered a most valuable business
asset, the CRM systems might be considered a must have system solution for businesses that are trying to compete,
succeed and sustain in the digital era, as they help companies and organizations understand and work with their
customers, determine the financial lifetime value of customers and identify exclusive needs of customers. Therefore,
it can be claimed that business value of these systems involves improved customer satisfaction that consequently
leads to increased loyalty and customer patronage, more effective marketing and decreased costs direct marketing,
customer acquisition and retention, improved efficiency of processes connected with marketing and sales, and thus
significant time saving,and generating increased sales revenues.
A. Operational Excellence
Businesses enterprises continuously seeks to increase the efficiency of their operations and processes in order to
better profitability. Information systems and internet based technologies are some of the most important tools
available to managers for attaining higher levels of efficiency and productivity in business operations, particularly
when coupled with changes in business practices, processes and management behavior(Laudon & Laudon, 2013).
B. New Products, Services, and Business Models
Information systems and technologies are a major enabling tool for business firms to develop new products and
services, as well as entirely new business models. A business model designates how a company produces, delivers,
distribute and sells a product to create wealth (Laudon & Laudon, 2013).
C. Customer and Supplier Intimacy
To produce and sell company products, a firm needs to create intimacy with suppliers and customers. When a
business really knows its customers and serves them well, the way they want to be served, the customers generally
respond by returning and purchasing more from that business enterprise which raises revenues and profits. Similarly
with suppliers: the more a business engages its suppliers, the better the suppliers can provide vital inputs. If there is
defect in raw material supply, it may leads to failure in production system and customer dissatisfaction. This lowers
costs of acquiring raw materials and customers. How to really know your customers, or suppliers, and focusing
customer retention is a central problem for businesses with millions of offline and online customers (Laudon &
Laudon, 2013).
D. Improved Decision Making
Many commerce managers operate in an in order mist bank, never really have the correct information at the correct
time to make an knowledgeable choice. Alternatively, managers rely on forecasts, best guesses, and luck. This kind
of decision may results in over or underproduction of goods and services, poor allocation of resources, and response
times. These poor outcomes increase costs and lose customers. In the past one decade, information systems and
technologies have made it reliable for managers to use just in time data from the marketplace when making
decisions. Using this reliable and real time information, managers can immediately allocate repair resources to
affected areas, inform consumers of improvement efforts, and recover service fast (Laudon & Laudon, 2013).
E. Competitive Advantage
When firms attain one or more of these business objectives operational excellence comes next; new products,
services, and business models; customer or supplier intimacy; and improved decision making chances are they have
already achieved a competitive advantage. Doing things better than competitors, good business strategies, charging
less for superior products, and responding to customers and suppliers in real time all add up to increases sales and
profits that competitors cannot match and gives competitive advantage to firm (Laudon & Laudon, 2013).
F. Survival
Now business environment is stiffly competitive in which competitors are implementing new systems, technologies
and business strategies that enhances their business operation and performances. In line with this, business firms
also invest in information systems and technologies because network based information technologies are
requirement of doing business. Sometimes these requirements are driven by industry-level changes (Laudon &
Laudon, 2013).
the competitive strategy. In order to win of competition, organizations have to continually develop new competitive
advantages through developing and using information system and technology to have better business strategy
(Porter& Millar, 1985).
Cost Leadership strategy: Organizations can use information systems to basically shift the cost of doing business
or reduce the costs of enterprise processes and to lower the costs of customers or suppliers, for example-commerce,
business to consumer and business to business models, electronic procurement systems to reduce operating costs.
The cost leader delivers a product of acceptable quality at the lowest possible cost. It tries to open up a significant
and sustainable cost gap over all other competing firms. The cost advantage is accomplished through superior
position in relation to the key cost drivers (Hemmatfer, Salehi & bayat, 2010).
Niche strategy: aim of niche marketing is to serve specifically selected market groups in very satisfying which
enhances company competitiveness. Choose a narrow-scope segment which is niche market and be the best in
quality, speed, or cost in that market(Hemmatfer, Salehi & Bayat, 2010). Information systems support this strategy
by producing and analyzing data for customized sales and marketing techniques. Information systems enable
companies to analyze customer buying patterns, purchasing power, tastes, and preferences intimately so that they
effectively and efficiently delivery advertising and marketing campaigns to smaller and smaller target markets
(Laudon & Laudon, 2013).
Differentiation strategy: business enterprises can use information technologies and systems to develop unique
features and to reduce competitors‟ differentiation advantages, which can be achieved through using online live
communication systems and social networks to better understand and deliver customer service; by using technology
to create intermediaries to offer value-added service and improve customers‟ connection to its web business;
applying advanced and established measures for online operations than offline practices(Manyika 2009).The
objective is to recognize and keep performance that is superior to any competitors in satisfying those buyer needs.
Hence, effective differentiation leads to premium prices and above-average profitably if there is approximate cost
parity (Laudon & Laudon, 2013). Manufacturers and channel members are using information systems to create
products and services that are individualized and customized to fit the customized specifications of individual
customers (Hemmatfer, Salehi & bayat, 2011).
Innovation strategy: In currently competitive business scenarios innovations is needed to sustain. Business
enterprise can use information systems to create new products and services, to develop new or niche markets, and to
radically transform business processes via digitization that is using digital modeling and simulation of product
design to reduce the time and cost to the market (Chui & Fleming 2011). By having this in mind, Internet and
telecommunications networks provide better capabilities and opportunities for innovation(Laudon & Laudon, 2013).
Growth-strategy: business firms can use ISs to expand domestic and international operations and to modify and
coordinate into other products and services, for instance, establishing global intranet and global operation platform;
establishing Omni-channel strategy to draw firms growth which enables to leveraging importance of online and
offline channels (Rigby, 2011).It enhances firm‟s market share, enables to get more customers, sales and
profitability. Thus strategy strengthens a company and grow-up profitability in the long run. Web-based selling can
facilitate growth by creating new marketing channels, such as electronic auctions(Laudon & Laudon, 2013).
Strategic Alliance: Currently, competitive world alliance with various stakeholders is needed to win turbulent
environment. Organization scan use ISs to enhance relations with partners via electronic business applications,
which consists of developing virtual organizations and inter-organizational information systems (Hemmatfer, Salehi
& Bayat, 2011).Work with business partners in collaboration, alliances or digitized firms. This strategy develops
synergy, allows firms to focus on their core business, and opportunities for growth(Laudon & Laudon, 2013).
Operational effectiveness strategy: Improve the manner in which internal business processes are executed so that a
firm accomplish similar activities better than competitors (Porter, 1996). improvements in internal business process
can increase employee and customer satisfaction, quality, and productivity while shrink time to market. Improved
decision making and management, this contribute to improved efficiency (Hemmatfer, Salehi & Bayat, 2011).
Customer-orientation strategy: Concentrate on making customers delight-ment. Highest competition and the
realization that the customer is king (queen) is the basis of this strategy. Network based systems that support
customer relationship management are particularly effective in this area because they can provide a customized,
personalized relationship with each customer (Hemmatfer, Salehi & bayat, 2011). Use ISs to tighten bondage with
suppliers and customer which focusing on customer relationship management (Laudon & Laudon, 2013).
Time strategy: Customers wants to save their time and treat time as a basic resource, then managing and utilizing it
to the firm‟s advantage is needed. “Time is money” Web-based time, first-mover advantage, real time delivery or
manufacturing, competing in time (Keen, 1988), and other time-based competitive concepts emphases the
significant of time as an asset and a source of competitive advantage. One of the driving forces behind time as a
competitive strategy is the need for firms to be immediately responsive to customers, markets, and changing market
conditions (Hemmatfer, Salehi & Bayat, 2011). The another is the time-to-market competition. Introduction
innovative products or using information technology to provide exceptional service, companies can create barriers to
entry from new entering to the market (Turban et al, 2006).
Lock in customers or suppliers strategy: Encourage customers or suppliers to stay with business enterprise rather
than going to competitors. Locking in customers has the consequence of reducing their bargaining power (Turban et
al, 2006).
Increase switching costs strategy: Discourage customers or suppliers from going to competitors for economic
advantage (Turban et al, 2006).
6. CONCLUSION
This review paper highlights the role of Information Systems (IS) in business organizations and competitive
advantage on a business perspective. IS becomes inevitable in today‟s information age as it has the power to bring
massive benefits to businesses, organizations, and the whole society. As briefly discussed in this review paper, IS
more definitely, types of information systems, functional systems, and cross-functional system solutions such as
SCM, CRM, ERP enables businesses to electronically exchange data and information anytime and anywhere in the
world with other end users, customers, suppliers, and business partners. Consequently, it helps companies build
competitive advantages and successfully compete in today‟s fast changing global economy. In today‟s turbulent
business environment, business organizations, in order to fully take advantage from business organizations should
emphasis on the alignment of information system acquisition with business processes and overall business strategy.
In conclusion, this review paper highlighted the role of IS in business organizations and competitive advantage on a
business perspective. Effective implementation and utilization of business information system provides business
organizations with strategic advantage and enhances organizational competitiveness.
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